Organizations will have to mind their step as new regulations will reshape the practice of healthcare in myriad ways, but none as much as its effects on coding.

After years of discussion and debate, the much-anticipated move toward a new coding system has finally arrived. In August, Health and Human Services (HHS) announced a proposed regulation that will replace the ICD-9-CM code sets now used to report healthcare diagnoses and inpatient procedures.

A proposal is currently on the table to adopt and implement the new, more advanced system, ICD-10, by October 1, 2011. And from all accounts, the powers that be plan to stick to that date despite heavy resistance from many lobbyists.

According to Sue Bowman, RHIA, CCS, director of coding policy and compliance with the AHIMA, ICD-10 reflects the need to accommodate a much more complex scheme of classifying diseases in light of recent advances in disease detection and treatment through innovations such as biomedical informatics, genetic research, and international data sharing.

“One of the biggest drivers in this is that ICD-9 is more than 30 years old. It’s lived out its usefulness,” she notes. “There’s also the fact that [a large share] of the world has moved to ICD-10.”

With ICD-10 already adopted by countries such as Canada, the United Kingdom, Germany, France, Russia, Brazil, South Africa, China, and Australia, many industry experts believe that the United States is in a position of playing catch-up with the collaboration.

“The health of populations supersedes country borders, so it is logical that knowledge about these diseases, their causes and cures, should be an international pursuit void of political boundaries and bias,” says Paul H. Keckley, PhD, executive director at the Deloitte Center for Health Solutions. “ICD-10 is, in many ways, a highway for international collaboration, a common language already spoken by 10 countries.”

Most healthcare experts agree that the move toward the new system will enhance healthcare delivery, but the implementation process does not come without its concerns. With increasing pressures on healthcare organizations to make substantial investments in IT infrastructure, some believe the time frame for implementation is unrealistic.

“The logical conclusion is that we do need this system. The only real contention is the timeline and the costs as presented by the government in its proposed rule,” says Sheri Poe Bernard, CPC, CPC-H, CPC-P, vice president of clinical coding content with the American Academy of Professional Coders (AAPC). “It is AAPC’s contention that the preliminary rule grossly underestimates the costs of conversion.”

The Need for Change
Implemented in the early 1970s before diagnosis-related groups were even in play, ICD-9 was mainly used as a method for indexing diseases for data retrieval, according to Bowman. Now that the system is used for reimbursement, “its structure is not set up for the needed level of specificity,” she says. “Codes were general, and that was acceptable back then.”

Alongside the need for more specificity, Bowman adds that efforts to update the system have left the industry without much room to grow. “We’re literally running out of code numbers in this limited structure,” she says. “The day is rapidly approaching where we will lack the ability to create new codes.”

As the most widely used diagnostic taxonomy in healthcare, the World Health Organization’s International Statistical Classification of Diseases and Related Health Problems has long provided the United States a system for coding that is used internationally to classify morbidity and mortality data for vital health statistics tracking and health insurance claim reimbursement. The 10th edition—ICD-10—was introduced in 1992 to address advances in medical knowledge and issues associated with morbidity and mortality reporting. Currently, the United States is the only country in the industrialized world that has not adopted the system.

“It is essential that information systems used by U.S. health plans, physicians, hospitals, ambulatory providers, and allied health professionals also become ICD-10 compliant,” Keckley says. “The collaboration of leading health systems to share knowledge and encourage innovation in the diagnosis and treatment of disease provides a solid framework for medical diplomacy. The implementation of ICD-10 is, therefore, more than an exercise in compliance. It is a key step in the continued maturation of the global healthcare system.”

A recent ICD-10 white paper published by the Deloitte Center points to a number of key benefits that healthcare institutions will achieve by the new system’s ability to “access more granular data.” Some tangible examples include improved claims adjudication and reimbursement rates due to more accurate payments for new procedures and fewer miscoded claims; improved patient safety and care via the sharing of more specific data on drug side effects and usage among key players; and improved utilization management through the efficient use of codes by payers along with the exchange of patient information across the care continuum.

The Readiness Factor
Perhaps the biggest controversy surrounding the move to ICD-10 rests in whether the government is allowing enough time for the healthcare industry to get on board.

“There are differences of opinions on that,” Bowman acknowledges. “We’ve [AHIMA] always believed that a three-year window would be sufficient … as long as people don’t waste time.” (Editor’s note: The AHIMA recently reversed its position and is now recommending a 2012 deadline.)

But waste time they will, asserts Bernard, who says that “people aren’t ready and, if history is any predictor, won’t get ready until just before implementation.”

While history may offer some insight into how quickly the industry may respond, Bernard says the greatest barrier to the timeline is the costs associated with systems changes, training, and productivity.

“Providers have been paying and paying and paying to meet compliance standards under HIPAA. Most don’t even have electronic medical records yet, largely because they can’t afford the technology,” she says. “It’s a new world in medicine, and providers are pinched financially by its technology requirements, the increasing scrutiny of programs like recovery audit contractors of CMS [the Centers for Medicare & Medicaid Services], and by increasing demands to increase productivity.”

The Deloitte white paper suggests that the massive overhaul of the nation’s medical coding system under ICD-10 has the potential to overtake Y2K in terms of impact and cost. Keckley believes it will require a massive wave of system reviews, new medical coding or extensive updates to existing software, and changes to many system interfaces.

Because of the complex structure associated with ICD-10 codes, implementing and testing the changes in such areas as electronic medical records, billing systems, reporting packages, and analytical systems is expected to require more effort than simply testing data fields. Ultimately, it will involve a system overhaul and extensive training for all constituents who access diagnosis codes, touching all payer administration and revenue cycle operational systems.

“Physician documentation will become a huge issue under ICD-10-PCS for inpatient reporting, and documentation shortcomings will also affect physician office billing,” Bernard contends, adding that the preliminary rule suggests only one in 10 physicians will want training, and that training will be able to be accomplished in four hours. “This is not reasonable,” she says. “The preliminary rule also assumes that most outpatient coding is done from a superbill—another fallacy.”

Alongside all the benefits that have been proposed as the outcome of ICD-10 implementation, Bernard suggests there will be significant negative impacts if it takes place as proposed. She cites claims delays, adverse effects on physician productivity, extended revenue cycles leading to increased medical bankruptcies, and more errors in claims requests.

“The proposed rule does not explore accurately the education requirements the new codes bring,” she says. “Systems are far less automated and have far fewer shortcuts than CMS suggests. These errors can actually increase the administrative cost of healthcare as the number of appeals and refiling of claims climbs.”

Another issue that poses a roadblock centers around chart mapping. Bowman notes that HHS will not likely require discharges and charges prior to the start date for ICD-10 to be converted from ICD-9, but the larger issue, according to Bernard, is that payers will need to update all mapping of ICD-9 to ICD-10.

“That means their edits will be on hold until the mapping is completed, which could lead to further delays,” she notes, adding that, in many cases, a clinical review will be required. “Consider a medical necessity edit showing which diagnostic codes are linked to a procedure. Those ICD-9-CM codes will need to be mapped to ICD-10-CM and, in many cases, the mapping is not a simple one-to-one relationship.”

Getting Ahead of the Curve
Keckley says U.S. healthcare organizations have a lot to consider before deciding how to address ICD-10 compliance, adding that payers and providers wanting to remain viable should consider ICD-10’s impact to their overall strategic plan before choosing an adoption strategy.

Entities should do their homework, Bernard adds. “Providers and payers alike need to ensure that any capital investments they are making on IT are made with companies that will be ICD-10 compliant much in the same way that we shopped for vendors who where Y2K compliant a decade ago,” she cautions. “Every business decision today should consider its ramifications on ICD-10 implementation. As a result, everyone should have baseline knowledge about the code sets and their implications.”

The Deloitte white paper notes that only those entities that seek to exceed “basic compliance” through the implementation will reap the potential of the expected benefits of ICD-10, which means driving the system into all core administrative and clinical functions.

The study anticipates that only 20% to 25% of healthcare organizations will approach implementation this way, and those entities that choose the bare minimum required by law will reap a negative return on investment in the process.

Bowman suggests beginning the strategic process early, emphasizing that the rule advocates getting started immediately. To that effect, Bowman has developed an AHIMA white paper that breaks the implementation into four phases and provides a comprehensive checklist.

“Some of the preparation activities necessary for implementation provide benefits to the organization even before ICD-10 is implemented, such as medical record documentation improvement strategies and efforts to expand coding staff knowledge and skills,” she notes. “Also, an early start allows for resource allocation, such as costs for systems changes and education, as well as staff time devoted to implementation processes, to be spread over several years.”

Bowman terms the first phase of the process as impact assessment, pointing to the need for organizations to measure the effects of the new coding systems and to identify key tasks and objectives. Major projects will entail the creation of an implementation planning team, budgeting for required information system changes, and the assessment, budgeting, and implementation of education initiatives.

Phase 2 of the process—the overall implementation phase—involves getting the required information system changes up and running, a follow-up assessment of documentation practices, and an increased emphasis on making sure the organization’s coding professionals are properly educated.

Go live encompasses the third phase and involves key tasks such as the finalization of systems changes, testing of claims transactions with payers, more intensive coder training, and monitoring of coding accuracy and the results of reimbursement with prospective payment systems.

The postimplementation process (phase 4) consists of monitoring coding accuracy for reimbursement, identifying other data management impact, reviewing coding productivity, and continuing with appropriate coder training.
More detailed information on each of these phases can be found at www.ahima.org/icd10/ICD-10PreparationChecklist.mht.

— Selena Chavis is a Florida-based freelance journalist whose writing appears regularly in various trade and consumer publications covering everything from corporate and managerial topics to healthcare and travel.

Stepping out as an Innovator
In a recent ICD-10 white paper, the Deloitte Center for Health Solutions points to the potential that the new coding system could bring to the healthcare industry. Experts predict that the vast majority of healthcare organizations will do only the bare minimum to comply or moderately exceed the mandates and that a small percentage—less than 15%—will use ICD-10 to further their overall agenda.

The benefits for those innovators willing to derive strategic value from the effort via new business partnerships, new care procedures, and the changing of business models to grow revenue streams include the following:

• Merger and acquisition opportunities that are an outgrowth of some organizations opting out of ICD-10 remediation due to the investment required.

• Shared service opportunities with entities looking for outsourced solutions for ICD-10 remediation.

• Information and data opportunities for healthcare entities that are early adopters of ICD-10. These groups will be in a position to partner with their peers and constituents to improve data capture and analytics.

• Personal health record opportunities for entities willing to leverage the detailed informational structure of ICD-10, making them, as well as regional health records, more achievable.